Below are some highlights of the outlines of each session, including links to the handouts of the presentations:

Monday, 04/27/09, 9:00-9:45


Integrity and Health Care Reform: The Charge to Government and Industry


Daniel R. Levinson, Inspector General, US Department of Health and Human Services



1)      Health Care Policy Landscape

a)      Health care reform

i)        Priority of Administration and Congress

ii)       Economy – financial strains, health care investments

b)      Accountability and transparency

i)        OIG roles – Recovery Accountability and Transparency Board

ii)       Roles of compliance professionals

2)      OIG’s 5-Principle Strategy for Health Care Integrity to Combat Healthcare Fraud, Waste, and Abuse:

1. Enrollment: Scrutinize provider applicants

2. Payment: Use reasonable, responsive methods

3. Compliance: Assist providers to comply

4. Oversight: Monitor for fraud, waste, abuse

5. Response: Punish fraud, remedy vulnerabilities

3)      Conclusion and Resources

4)      OIG resources available online at:

  • Exclusions Program and LEIE
  • Compliance Resources – Compliance Program

Guidance, advisory opinions, roundtable summaries

  • Self-Disclosure Protocol and Open Letters
  • OIG work plan
  • Audit and evaluation reports


Monday, 04/27/09, 9:45-10:30


General Session: Hedging Your Bets: Following the Rules of CMS Compliance


Kim Brandt, Director Program Integrity Group, CMS




1)      Overview of CMS’ FFS contractors

a)      Program Integrity Group

i)        “Program Integrity” refers to all CMS programs      aimed at:

(1)   Detecting and preventing fraud in the Medicare fee-for-service, Medicare Advantage and Part D programs.

(2)   Ensuring the integrity of the Medicare fee-for service enrollment process.

(3)   Promoting compliance with Medicare rules.

b)      Contractors

i)        Zone Program Integrity Contractors (ZPICs)

(1)   Seven zones based on MAC jurisdictions

(a)    Five “hot spot” zones

– California, Florida, Illinois, New York and Texas

– “Hot spots” align with Program Integrity field offices

– Focus on quick response to fraud and administrative actions

– Reduce emphasis on fraud referrals as law enforcement does not have the resources to accept them

(b)   Two other zones

– 24 states with limited incidence of fraud

– Continue using proven PSC processes

(c)    To prepare for the transition from PSCs to ZPICs, providers should continue to submit claims appropriately.

(d)   ZPICS – Benefits of the Strategy

(i)      Strategy achieves best value for CMS by leveraging economies of scale and concentrating in high fraud areas

(ii)    Increased efficiency to look at providers across all benefit categories

(iii)   Economies of scale through the consolidation of contractor management, data/IT requirements, facility costs, etc.

(iv)  Streamline CMS costs in acquisition, management and oversight

(v)    Better coordination and less resources required for the States

(vi)  Increased security of PHI due to fewer contractors handling the data

(e)    ZPIC Awards

(i)      Both Zone 4 and Zone 7 were awarded on September 30, 2008 and transitions began immediately.

(ii)    Zone 4 was awarded to Health Integrity LLC, a current Part D Medicare Drug Integrity Contractor.

(iii)   Zone 7 was awarded to SGS, the incumbent Program Safeguard Contractor for Part A and B benefit integrity functions.

(iv)  Both became fully operational — which means the zones will be handled by a ZPIC rather than a PSC, on February 1, 2009.

(v)    Cycle 2 (Z ones 1 and 2) procurement is ongoing. No awards have been made.

(vi)  Cycle 3 (Zones 3 and 6) has not yet been released.

(f)     ZPIC and MAC Operations

(i)      Will there be any differences in the relationships between ZPICs and MACs as compared to the relationships between PSCs and the contractors?

–        Both ZPICs and MACs are now required to have dedicated liaisons for the other contractor, i.e., the ZPIC has a MAC Liaison and the MAC has a ZPIC Liaison.

–        Note: the liaison is not necessarily full-time, but it is a single person who consistently fills this role.

–        We anticipate that this position will enhance the interaction and communication between the ZPICs and MACs.

(g)    Role of PSCs /ZPICs

– Ensure that fraudulent or abusive behavior against the Medicare   program is identified and corrective action is taken.

– Serve as a law enforcement liaison to ensure coordination on cross-cutting issues.

– Impose Administrative Actions such as suspensions, overpayment collections, referrals or sanctions.

– Identify, monitor and track fraud, waste, and abuse in Medicare through data analysis.

– PSCs/ZPICs also conduct a significant amount of data analysis to supporting requests for information by law enforcement.  These activities support cases which are going to trial or settlement negotiations.


(h)    What are the Potential Triggers for a PSC/ZPIC Review?

(i)      Aberrant patterns outside the norm

– High utilization of services or items

– High costs services or items

(ii)     Insufficient documentation submitted with a claim

(iii)   Trigger points for reviews are not limited to these examples

NOTE: Typically, desk audits are conducted. However, PSCs/ZPICs may conduct onsite reviews.

(i)      Tips for Properly Submitting A Claim



(iii)   Ensure that your staff knows the coverage and payment rules of the benefit being billed

– Statute and regulation citations

– NOTE: The Program Integrity Manual is the guide for the contractors, not the providers

(iv)  Training

– Provide routine training for staff on new Medicare policies

– Take advantage of any contractor provided training

– Utilize the CMS website for policy updates

(v)    Ensure the submitted medical evidence fully supports the level of service being billed

(vi)  Look to see what improper payments have been identified in reports from the Office of Inspector General and the General Accountability Office

(j)     If you are reviewed:

(i)      Respond to any documentation request completely and in a timely manner!!!

(k)   Be Prepared: Learn from Your Past Experiences

(i)      Routinely, conduct an internal assessment to identify if you are in compliance with Medicare rules

(ii)    Determine what corrective actions you need to take to avoid inappropriate billing

(iii)   Keep track of any denied claims and the reason for denial

(iv)  Look for patterns in your billing

ii)       Recovery Audit Contractors (RACs)

(1)   The RAC Program Mission

(a)    The RACs detect and correct past improper payments so that CMS and Carriers, FIs, and MACs can implement actions that will prevent future improper payments

– Providers can avoid submitting claims that do not comply with Medicare rules

– CMS can lower its error rate

– Taxpayers and future Medicare beneficiaries are protected

If you bill fee-for-service programs, your claims will be subject to review by the RACs

(2)   What does a RAC do?

(a)    RACs review claims on a post-payment basis

(b)   RACs use the same Medicare policies as Carriers, FIs and MACs

– NCDs, LCDs, CMS Manuals

(c)    Two types of review:

– Automated (no medical record needed)

– Complex (medical record required)

(d)   RACs will not be able to review claims paid prior to October 1, 2007

– RACs will be able to look back three years from the date the claim was paid

(e)    RACs are required to employ a staff consisting of nurses, ort therapists, certified coders, and a physician CMD

(3)   RAC Review Process: Selecting Claims

(a)    RACs choose claims/issues to review based on data mining techniques, OIG & GAO reports, CERT reports and the experience and knowledge of staff

(b)   Two types of review

– Automated (no medical record)

– Complex (medical records)

(c)    New Issues for review will be posted to RACs website before widespread review

(d)   RACs will be able to look back 3 years from the date the claim was paid

(e)    RACs will not review claims paid prior to October 1, 2007

(4)   RAC Review Process: Requesting Medical Records

(a)    RACs will send letters requesting medical records like Carrier/FI/MAC & CERT

(b)   RACs must pay for inpatient hospital records

(c)    Failure to submit requested record in 45 days = denial

(d)   CMS has established medical record limits, RACs must follow established medical record limits

(e)    Providers are encouraged to have a point of contact

(f)     Providers can submit medical records via:

– Mailed paper copy or

– Fax or

– Mailed CD/DVD

2)      How to be prepared if audited

(1)   What Can I do to Prepare for RAC Review?

(a)    Know where previous improper payments have been found

(b)   Know if you are submitting claims with improper payments

(c)     Prepare to respond to RAC medical record requests

(d)   Know Where Previous Improper Payments Have Been Found

– Look to see what improper payments were found by the RACs:

(i)      Demonstration findings:

(ii)    Permanent RAC findings: will be listed on the RACs’ websites

– Look to see what improper payments have been found in OIG and CERT reports

(iii)   OIG reports:

(iv)  CERT reports:

(e)    Know if you are submitting claims with improper payments

– Conduct an internal assessment to identify if you are in compliance with Medicare rules

– Identify corrective actions to implement for compliance

(f)     Prepare to Respond to RAC Medical Record Requests Fully and Promptly

– Tell your RAC the precise address and contact person they should    use when sending Medical Record Request Letters

(i)      Call RAC

(ii)    No later than 1/1/2010: use RAC websites

– When necessary, check on the status of your medical record (Did the RAC receive it?)

(iii)   Call RAC

(iv)  No later 1/1/2010: use RAC websites

(g)    Appeal When Necessary

– The appeal process for RAC denials is the same as the appeal process for Carrier/FI/MAC denials

– Do not confuse the “RAC Discussion Period” with the Appeals process

(i)      If you disagree with the RAC determination…

– Do not stop with sending a discussion letter

– File an appeal before the 120th day after the Demand letter

(2)   Be Prepared: Learn from Your Past Experiences

(a)    Keep track of denied claims

(b)   Look for patterns

(c)    Determine what corrective actions you need to take to avoid improper payments

3)      Top problem areas that providers need to watch

(1)   Maximize Transparency

(a)    Once the RAC program goes national:

– New issues will be posted to the web

– Vulnerabilities will be posted to the web

– RAC claim status website (2010)

– Detailed review results letter following all complex reviews

4)      Discussion of how these audit activities are coordinated within CMS

a)      There a variety different types of audits are currently underway in the FFS arena

i)        CMS is in the process of redefining our approach to oversight activities to minimize duplicative efforts while ensuring the Agency meets it’s obligation to provide appropriate contractor oversight.

ii)       However, CMS has no control of audit or information requests from other government entities, e.g. OIG.

iii)     CMS acknowledges that audits are time consuming, and we will continue to coordinate these audits as much as possible.

5)      What to expect from Program Integrity in 2009

a)      Provider Enrollment will have the most significant impact in preventing and reducing fraud in the Medicare program.


Monday, 04/27/09, 11:00-12:00

Medicaid Compliance-Focus Areas of Medicaid Fraud Control Units


Christine Bachrach, Senior Vice President – Chief Compliance Officer, HealthSouth


Session cancelled


Monday, 04/27/09, 1:30-2:30


General Compliance/Hot Topics-Ready or Not, Here They Come! Preparing for and Defending RAC Audits


Andrew Wachler, Esq., Wachler & Associates, P.C. and Jennifer O’Brien, Esq., Halleland Lewis Nilan & Johnson




1)      Current Legal Developments

a)      Automatic Stay of RAC program

i)        CMS imposed an automatic stay of the contract work of the four RACs. This action is the result of protests filed to the General Accountability Office (GAO) by Viant, Inc. and PRG Schultz International, Inc., two unsuccessful bidders for RAC contracts.

(1)   100 days to issue decision

(2)   RACs will likely begin auditing in February 2009

b)      Medicare Recovery Audit Contractor Program Moratorium Act of        2007, H.R. 4105

i)        Directs the Secretary of the Department of Health and Human Services (HHS) to effect a one-year moratorium of the RAC program, during which time:

(1)   CMS will evaluate the program for Congress

(2)   The Comptroller General will prepare a report to Congress on the use of RAC auditors.

c)      AnMed Health et al. v. Leavitt et al., docket number 8:08-CV-02453-HFF (D. SC)

i)        A complaint filed by 32 South Carolina hospitals on July 3, 2008 alleges that:

(1)   CMS improperly recouped $30 million in alleged overpayments before plaintiff hospitals filed requests for reconsideration, contrary to Section 935 of MMA. In most cases, the intermediary recouped payment simultaneously with or before notice letters were sent to providers;

(2)   CMS allowed the RACs to apply different standards for evaluating medical necessity than it requires the providers to use.

d)      MLN Matters MM6183 (Sept. 29, 2008) – Timeframes for recoupment

i)         After the Intermediary or Carrier makes an unfavorable initial determination, withholding may begin on the 41st day following the date of the demand letter, unless a request for redetermination is received within 30 days from the date of the demand letter.

(1)   Once a provider files a request for redetermination, Medicare will cease its withhold activities.

ii)       After the Intermediary or Carrier makes an unfavorable redetermination decision, withholding may begin 61 days, unless the provider first appeals a request for reconsideration.

(1)   The Intermediary or Carrier may not initiate, and must cease, recoupment once a valid and timely request for reconsideration has been filed.

iii)     After the Intermediary or Carrier makes an unfavorable reconsideration decision, withholding may begin.

e)      MLN Matters MM6131 (Jan. 1, 2009) – Denials for non-compliance with physician self-referral prohibition

i)        Institutes a new denial code to be used when claims are denied because of non-compliance with the physician self-referral prohibitions

ii)       Denial code will be used when a claim is denied because a physician (or one or more of their immediate family members) has a financial interest in a DHS provider and fails to meet one of the statutory exceptions

iii)     Violations of physician self-referral laws are punishable by:

(1)   Denial of payment for all DHS claims

(2)   Refunds of amounts collected for DHS claims

(3)   Civil money penalties for knowing violations.

f)        Medicaid Integrity Plan (MIP)

i)        Established by Section 6034 of the Deficit Reduction Act of 2005 (DRA)

ii)       Directs HHS to enter into contracts to carry out activities, including:

(1)   Review of actions of individuals or entities furnishing items for services for which Medicaid payments were made

(2)   Audit of claims for payment for items or services rendered for which a Medicaid payment was made

(3)   Education of service providers, managed care entities and beneficiaries

iii)     Authorizes the use of Medicaid Integrity Contractors (MICs) to identify overpayments – Like Medicare RACs but for Medicaid.

g)      California RAC Experience

i)        Pursuant to the Statement of Work, RACs are bound by Medicare regulations,  NCDs, LCDs and other Medicare policies in conducting reviews.

(1)   IRF services – Medicare contractors (including RACs) found to have used inconsistent criteria when reviewing IRF claims. The RAC’s authority to review IRF claims “paused,” and rereview of all denials was performed.

(a)    Approximately 27% of IRF claim denials reversed on re-review.

ii)       Inpatient hospital “short stay” cases – RAC reviews were based upon InterQual criteria, rather than Medicare policy.

iii)     Inpatient hospital “short stay” cases

(1)   Many of these claims were denied for the reason that care could have been provided at the observation level of care, rather than the inpatient level of care

(2)   These claims were denied outright, and were not recoded to the observation level of care by the RACs

(3)   During the demonstration program, providers were permitted to re-bill denied claims at the observation level. It is unclear whether this will be an option under the permanent RAC program.

iv)     Code 44 issue

v)      CHA concerns with the RAC Evaluation Report

(1)   Appeals data is premature

(a)    Many claims still in the appeals process

(b)   Many claims included in the Evaluation Report will be re-billed.

(2)   Evaluation Report states that each RAC had a physician medical director, which was not true until May 2007.

(3)   Provider satisfaction survey not reflective of CA experience.

2)      Legal Issues Arising in the Demonstration Program

a)      Under the Demonstration Program the RACs were provided a 4-year look back period

i)        Provider without Fault considerations

b)      Appeals challenging proper reopening of claims

i)        See recent MAC decision of Critical Care of North Jacksonville v. First Coast Service Options, Inc.

ii)       Note also recent ALJ decisions permitting challenge of good cause.

c)      Notice issues

i)        Providers did not always receive proper notice from the RACs of claim denials, contrary to Statement of Work.

d)      QIO

i)        Potential issue if discrepancy between QIO and RAC findings – Waiver of Liability, Provider without Fault

e)      Inpatient / Outpatient Observation

3)      Can Medicare providers avoid RAC audits and claim denials?

a)      Maybe Not – However, providers can limit exposure for take-backs by enacting solid compliance measures and ensuring appropriate administrative systems are in place to address the challenges posed by the RACs.

4)      The Compliance Component

5)      Preparing for the RACs

a)      The RACs have an operational, compliance, audit and legal component that is unique and which requires organizations to form cross functional teams to prepare for the upcoming audits:

i)        Health Information Management

ii)       Patient Financial Services

iii)     Coding

iv)     Utilization Review/Care Management

v)      Medical Staff

vi)     Compliance

vii)   Internal Audit

viii)  Legal

6)      The Compliance Component

a)      Identify and monitor areas that may be subject to review;

i)        OIG Work Plan

ii)       Areas scrutinized in the RAC demonstration program

iii)     Quality Improvement Organization (“QIO”) data

iv)     Internal risk assessment

b)      Analysis of Claims Data and Medical Records

i)        Utilize various denial management tools and coding expertise developed internally

ii)       Initiate an analysis of denial data, PEPPER data, and any other data available related to claims history

iii)     Once risk areas are identified in the data analysis, pull a sample of claims for a detail billing and coding review

c)      Develop and implement effective processes to respond to record requests and prepare for appeals, if necessary.

i)        Be prepared to log, track and review every demand letter

ii)       Monitor for correct version of payment or coverage policy

iii)     Be prepared to provide documentation to support convincing appeals

d)      Be on time with RAC deadlines

e)      Areas subject to review in the RAC demonstration

i)        85% of claim denials involved inpatient hospital claims;

ii)       Of these, 41% were “wrong setting” denials

iii)     6% of claim denials involved IRFs;

iv)     4% of claim denials involved outpatient hospitals;

v)      The remaining claims involved the claims of physicians, skilled nursing facilities, durable medical equipment, suppliers, and ambulance, laboratory or other providers.

vi)     See CMS RAC Demonstration Evaluation Report, available at

7)      The Medicare Appeals Process

a)      120 days to file a request for redetermination

i)        30 days to avoid recoupment

b)      180 days to file a request for reconsideration by a QIC

i)        60 days to avoid recoupment

c)      60 days to file a request for an Administrative Law Judge (ALJ) hearing

i)        CMS will recoup the alleged overpayment during this and following stages of appeal

d)      60 days to file an appeal to the Medicare Appeals Council (MAC)

e)      60 days to appeal to the federal district court

i)        Note: Amount in controversy requirements must be met at the Administrative Law Judge hearing stage and federal district court stage.

8)      Levels of Appeal

a)      First Level of Appeal: Redetermination (42 CFR §§ 405.940-58)

i)        Providers must file requests for redetermination within 120 calendar days from receiving the initial determination (or within 30 days to avoid recoupment)

(1)   Issue in the RAC demonstration – Medicare providers did not always receive notice of denial from the RACs

ii)       No amount in controversy requirement

iii)     Must be submitted in writing

iv)     Redetermination: Timeframe

(1)   The contractor must mail or otherwise transmit notice of its redetermination decision within 60 calendar days of receiving the request. The contractor may extend the 60 day timeframe an additional 14 days if the provider submits additional evidence after filing the redetermination request. (42 CFR § 405.950).

b)      Second Level of Appeal: Reconsideration (42 CFR §§ 405.960-78)

i)        Providers who are dissatisfied with a redetermination may file a request for QIC reconsideration

ii)       Providers must file requests for reconsideration within 180 calendar days (or within 60 days to avoid recoupment)

iii)     No amount in controversy requirement

iv)     Reconsideration – On-the-Record Review

(1)   “On-the-record” review as opposed to an in person hearing

(2)   On-the record review consists of a review of the initial determination, the redetermination and all issues related to the payment of the claim. (70 Fed. Reg. 11447-48).

(3)   Reviews Involving Medical Necessity

(a)    Medical necessity reviews must be performed “by a panel of physicians or other appropriate health care professionals, and be based on clinical experience, the patient’s medical records, and medical, technical, and scientific evidence of record to the extent applicable.” (42 CFR § 405.968 (a)).

(4)   Binding Authority

(a)    Bound by National Coverage Decisions, CMS rulings, and applicable laws and regulations.

(b)   Not bound by Local Coverage Decisions, Local Medical Review Policies, or CMS program guidance such as program memoranda and manual instructions. (42 CFR § 405.968 (b); 70 Fed. Reg. 11447).

(5)   Full and Early Presentation of Evidence

(a)    Absent good cause, failure of a provider to submit evidence, including documentation requested in the notice of redetermination, prior to the issuance of the notice of reconsideration, precludes subsequent consideration of the evidence (42 CFR § 405.966).

(6)   Reconsideration – Timeframe

(a)    60 days to act

(b)   The QIC may extend the 60 day timeframe an additional 14 days if the provider submits additional evidence after filing the reconsideration request.

(c)    If the QIC fails to render its reconsideration decision within the required timeframe, a provider may request an ALJ hearing

(i)      Recent OIG Report found that Part B QICs did not meet the 60 day timeframe 58% of the time.

(ii)    Notice issues (authorized representative, etc.) (42 CFR § 405.970).

c)      Third Level of Appeal: ALJ Hearing (42 CFR §§ 405.1000-64)

i)        A provider dissatisfied with a reconsideration decision may request an ALJ hearing

ii)       Amount in controversy requirement

iii)     ALJ Hearing – Video-Teleconferencing (VTC)

(1)   ALJ hearings may be conducted in-person, by video-teleconference (VTC) or by phone.

(2)   The Final Rule requires ALJ hearings be conducted by VTC if the technology is available. (42 CFR § 405.1020 (b)).

iv)     ALJ Hearing – Discovery

(1)   Discovery is only permitted when CMS elects to participate in the hearing as a party.

(a)    However, providers can make a FOIA request for a copy of a QIC’s notes and can request an ALJ’s hearing file. 42 CFR § 405.1037.

(2)   CMS or its contractors may participate in an ALJ hearing without necessarily joining as a party 42 CFR § 405.1010

(3)   CMS or its contractors may be a party to a hearing 42 CFR § 405.1012

v)      ALJ Hearing – Binding Authority

(1)   Bound by National Coverage Decisions, CMS rulings, and applicable laws and regulations.

(2)   Not bound by Local Coverage Decisions, Local Medical Review Policies, or CMS program guidance such as program memoranda and manual instructions. 42 CFR § 405.1062.

vi)     ALJ Hearing – Statistical Sampling

(1)   When an appeal from the QIC involves an overpayment in which the QIC relies upon a statistical sample in making its decision, the ALJ must base his or her decision on a review of all claims in the sample. 42 CFR § 405.1064.

vii)   ALJ Hearing – Timeframe

(1)   90 days to act

(2)   A provider who timely files for an ALJ hearing, and whose appeal continues to be pending after the adjudication time period has ended, has the right to request that the case be escalated for MAC review 42 CFR § 405.1016.

d)      Medicare Appeals Council (MAC) and Judicial Review stages (42 CFR § § 405.1100-40)

i)        60 days to file MAC review

ii)       A party does not have the right to seek MAC review of an ALJ’s remand to the QIC or an ALJ’s affirmation of a QIC’s dismissal on a request for reconsideration. 70 Fed. Reg. 11467.

iii)     MAC Review

(1)   No hearing

(2)   De novo review 70 Fed. Reg. 11467

(3)   The MAC may decide on its own motion to review a decision or dismissal by an ALJ.

(4)   CMS or any of its contractors also may refer a case to the MAC any time within sixty (60) days after the date of an ALJ’s decision or dismissal of a case, if in its view the decision or dismissal contains an error of law material to the outcome of the claim or presents a broad policy or procedural issue that may affect public interest.42 CFR § 405.1106-10.

(5)   Requirements for Request for MAC Review:

(a)    The request must identify the parts of the ALJ action with which the party disagrees and explain the reasons for disagreement.

(b)   Unless the request is from an un-represented beneficiary, the MAC will limit its review to those exceptions/issues raised by the appellant in the written request for review. 42 CFR § 405.1112.

(6)   MAC Review – Written Statement and Oral Argument

(a)    Written Statements: Upon request, the MAC will grant the parties a reasonable opportunity to file briefs or other written statements.

(b)    Oral Argument: A party may request to appear before the MAC to present oral argument on the case. The MAC will grant such a request if it decides that the case raises an important question of law, policy, or fact that cannot be readily decided based on the written submissions.42 CFR § 405.1120-24.

(7)   MAC Review – Timeframe

(a)    90 days to act

(b)   If the MAC fails to act within 90 days, the appellant may request that the appeal, other than an appeal of an ALJ dismissal, be escalated to federal district court. 42 CFR § 405.1132.

e)      Federal District Court

i)        60 days to file

ii)       A court may not review a regulation or instruction that relates to a method of payment under Medicare Part B if the regulation or instruction was published or issued before January 1, 1991.

iii)     In a federal district court action, the findings of fact by the Secretary of HHS, if supported by substantial evidence, are deemed conclusive.42 CFR § 405.1136.

9)      Strategic Approaches to Audits

a)      Arguing the Merits

i)        Preparation of Rationales (Position Paper)

ii)       Impact of NCDs and LCDs

iii)     Expert Involvement

iv)     Reviewer Credential Issues

b)      Audit Defenses

i)        Provider without Fault

(1)   Section 1870 of the Social Security Act

(2)   Once an overpayment is identified, payment will be made to a provider if the provider was without “fault” with regard to billing for and accepting payment for disputed services

(a)    Definition of fault

(b)   3 Year Rule

ii)       Waiver of Liability

(1)   Section 1879(a) of the Social Security Act

(2)   Under waiver of liability, even if a service is determined to be not reasonable and necessary, payment may be rendered if the provider or supplier did not know, and could not reasonably have been expected to know, that payment would not be made.

iii)     Treating Physician’s Rule

(1)   The treating physician rule, as adopted by some courts, reflects that the treating physician’s determination that a service is medically necessary is binding unless contradicted by substantial evidence, and is entitled to some extra weight, even if contradicted by substantial evidence, because the treating physician is inherently more familiar with the patient’s medical condition than a retrospective reviewer.

(a)    Authorities that have addressed this issue include: State of N.Y. v. Sullivan, 927 F.2d 57, 60 (2nd Cir. 1991); Klementowski v. Secretary of HHS, 801 F.Supp 1022 (1992); Gartman v. Secretary of HHS, 633 F.Supp. 671, 680-82 (E.D. NY 1986); Wickline v. California, 228 Cal. Rptr. 661 (Cal. App. 2d Dist. 1986); Breeden v. Weinberger, 377 F.Supp. 734 (1974); Collins v. Richardson, Medicare/Medicaid Manual, ¶26,500 (Iowa, 1972); Pillsums v. Harris, CCH, Medicare/Medicaid Manual, ¶309,080 (CA 1981); Handerson v. Harris, No: 80 8066, Slip Opinion at 622 (2nd Cir., 12/17/80); and Stearns v. Sullivan, NO 88-2756-Z, CCH Medicare/Medicaid Manual, ¶38,273 (D.C. Mass 1989).

iv)     Challenges to Statistics

(1)   Section 935 of the MMA

(2)   The guidelines for conducting statistical extrapolations are set forth in the Medicare Program Integrity Manual (CMS Pub. 100- 08), Chapter 3, §§ 3.10.1 through

v)      Reopening Regulations

(1)   42 C.F.R.§405.980

(a)    But See recent MAC decision of Critical Care of North Jacksonville v. First Coast Service Options, Inc.

(b)   Note also recent ALJ decisions permitting challenge of good cause.

c)      RAC Appeal Experiences

i)        Inpatient Rehabilitation Facility Denials

(1)   IRF Denials – Effective Appeal Strategies

(a)    Many IRF denials are for the reason that the care provided could have been provided in a Skilled Nursing Facility (“SNF”), rather than an IRF.

(b)   Effective IRF Denial Appeal Strategies

(c)    Standards

(i)      Medicare Benefit Policy Manual (CMS Pub. 100-02), Chapter 1, Section 110

(ii)    HCFA Ruling 85-2

(d)   Arguing the merits

(e)    Importance of expert involvement

ii)       Inpatient Short Stay Denials

(1)   In the demonstration program, the RACs denied many inpatient short stays (e.g. one day stays), for the reason that the inpatient level of care was inappropriate, and care could have been rendered at the outpatient level.

(a)    In the RAC demonstration program, providers were permitted to re-bill these services as observation services.

(b)   It is unclear whether re-billing will be permitted in the permanent RAC program.

(2)   Effective Appeal Strategies

(a)    Standards

(i)      Medicare Benefit Policy Manual (CMS Pub. 100-02), Chapter 1, § 10

1.      RAC’s inappropriate use of InterQual criteria as a basis for denial

(ii)    Medical necessity criteria in 42 C.F.R. §411.406 (e), HCFR Ruling 95-1

(b)   Arguing the merits

(c)    Importance of expert involvement

(d)   Code 44 issue

Monday, 04/27/09, 3:00-4:00


Medicaid Compliance-New York State: Medicaid Managed Care Compliance Landscape


Regina F. Gurvich, MBA, CHC, Director of Compliance, Health Plus PHSP and Robert Hussar,  Director of Compliance First Deputy Medical Inspector, Health Plus PHSP State of New York, Office of the Medicaid Inspector General




1)      Historical Enforcement Climate

a)      No plan at federal level

b)      No Federal oversight

c)      Limited funding

d)      Move to managed care changed mindset

e)      State attention varied, but was low priority

f)        Limited data mining and matching

g)      A small number of prosecutions

2)      New York State – ’90s to 2005

a)      No new hires in 15 years

b)      Skilled work force retiring

c)      “provider friendly”

d)      Limited technology

e)      Reliance on Managed Care to ‘police’

3)      Current New York Medicaid Environment

a)      Provides health care to 4.4 million recipients

b)      % of population enrolled in Medicaid – New York 18% vs. US 14%

c)      New York ranks first on Medicaid spending per capita ($2,283)

d)      New York’s per capita spending is twice the national average ($1,026)

e)      Medicaid spending will grow to over $48 billion in FY 2009/10

f)        Per enrolled Medicaid expenditure (FY 2003) – NY $7,912 vs. USA $4,484

4)      Existing Compliance Framework (2002)

a)      Federal Regulations

b)      State Regulations

c)      MCO/ State Contract

d)      Federal Medicaid Integrity Program

e)      OIG/AHLA Resource documents

f)        OIG Work Plan

5)      Post-Deficit Reduction: State Arsenals

a)      Enactment or amendment of state False Claims Act

b)      Unprecedented staffing levels

c)      Mandatory compliance programs

d)      Enhanced coordination

e)      New penal statutes

f)        Overlapping processes

g)      DRA education requirements

h)      Data mining

i)        Increasing use of exclusion authority

6)      Office of Medicaid Inspector General

a)      October 2006 – Federal – State Health Report Partnership Medicaid

Demonstration Agreement (F-SHRP)

b)      $1.5 billion Federal Commitment

c)      State Fraud and Abuse Recovery plan:

d)      FY 2008 – $215 million

i)        FY 2009 – $322 million

ii)       FY 2010 – $429 million

iii)     FY 2011 – $644 million

7)      2006: New environment – organizational perspective

a)      Increased risks of unexpected losses caused by regulatory actions

b)      Failure to have compliance program has more drastic consequences in the new environment

c)      Increased audits and recoveries by AG and OMIG

d)      Increased expenses to comply 9

8)      Recovery of Overpayments

a)      In 2006, Medicaid Fraud Control Unit recovered $60 million by court order alone

b)      In 2006 – OMIG recovered $345 million

c)      In 2007, MFCU obtained court orders for payment of $112 million

d)      2007-08 OMIG recovered $551 million

e)      2009 OMIG expects $695 Million

9)      New York Laws

a)      Civil Laws

i)        False Claims Act (NY Finance law §§187-194)

ii)       False Statements (Social Services law §§145-b)

iii)     Compliance program requirement (Social Services Law, §363-d)

b)      Criminal Laws

i)        Corporation – Penal Law §20.20

ii)       Individual – Penal Law §20.25

iii)     Health Care Fraud – Penal Law §177

iv)     Larceny – Penal Law §155

10)  False Claims Litigation: Issues

a)      Statue of Limitations

b)      Original Source Rule

c)      Public disclosures

d)      Quality failures as False Claims

e)      Lack of Medical Necessity as False Claims

f)        Non-compliance, as ‘causing to be submitted’ False Claims

g)      Express and implied certifications

h)      Knowledge

11)  New York: Leading the trend

a)      Social Services Law, §363-d “Every provider of medical assistance program items and services (including all Article 28 entities, and other subject to IG regulatory inclusion) shall adopt and implement a compliance program including the following elements”

12)  OMIG Compliance Guidance

a)      Compliance Officer designation

b)      A system to routinely identify compliance risk areas

c)      A system for responding to compliance issues as they arise

d)      Training and education

e)      Communication lines

f)        Disciplinary policies

g)      A policy of non-intimidation and nonretaliation

h)      Written policies and procedures

13)  Element I: Policies and Procedures

a)      Code of Conduct

b)      Outline of compliance expectations

c)      Guidance on addressing compliance issues

d)      Outline of processes for investigation and resolution

e)      Accessible to all

f)        Update regularly and systematically

14)  Element II: Compliance Officer

a)      Key member of the senior management

b)      Reporting to CEO

c)      Access and periodic reports to the Board

d)      Oversight of day-to-day compliance program operation

e)      Has adequate resources

f)        Compliance committee

15)  Element III: Training and     Education

a)      Requirement applies to Board and staff

b)      Includes orientation and Annual training

c)      Detailed FCA and DRA discussion

d)      Certification of DRA compliance

e)      Documentation of training

f)        Assessment of effectiveness

16)  Element IV: Communication lines

a)      Culture of open communication

b)      Management accountability and duty to report

c)      Alternative lines of reporting are available, accessible, and well publicized

d)      Methods for anonymous and confidential reporting

17)  Element V: Discipline Policy

a)      Formal policies are publicized

b)      Outline compliance responsibilities, duty to report, and cooperate

c)      Outline management responsibility for compliance

d)      Tie compliance to performance

e)      Fair and appropriate enforcement

18)  Element VI: Risk Management

a)      Periodic risk assessments

b)      Internal and external audits

c)      Process for addressing noncompliance

d)      Process for mitigating risks

e)      Ongoing monitoring

19)  Element VII: Responding to Compliance Issues

a)      Investigation is coordinated by Compliance Officer

b)      Immediate and appropriate measures to protect health and safety

c)      Evidence is promptly secured

d)      Investigation is timely and thorough

e)      System for addressing corrective actions

f)        Reporting/ self-disclosure to SDOH and/or OMIG

20)  Self-Disclosure Protocol

a)      Compliance program mandate

b)      Disclosure considerations

c)      Federal requirements

d)      2006 New York State Statutory Requirements

e)      OMIG Disclosure Protocol

21)  Element VIII: Non- Retaliation Policy

a)      Protects good faith reporting

b)      Uniformly applied

c)      Policy is publicized

d)      Investigation of violations conducted by Compliance Officer

e)      Prompt and thorough response to violations

22)  It’s not just about the 8 elements

a)      8 Elements plus….

b)      7 Risk Areas

i)        Governance

ii)       Quality

iii)     Credentialing

iv)     Billing and payment

v)      Mandatory Reporting

vi)     Special Investigation Unit

vii)   Marketing & Enrollment

23)  Risk area I: Governance

a)      Ultimate authority for compliance

b)      Composition of the Board to include clinical, quality, and fiscal expertise

c)      Principles of governance

d)      Board obligations

e)      Fiscal integrity

f)        Conflict of Interest

g)      Training and Oversight

24)  Risk area II: Quality

a)      Oversight of Quality Assurance functions

b)      Periodic review of QA systems and related data

c)      Integration of QA and Compliance

d)      2007 Quality Strategy for State Medicaid Managed Care Program

e)      Timely and effective root cause analysis

f)        Corrective action

25)  Risk area IV: Credentialing

a)      Best practices

b)      Initial and periodic review of applicable databases (NPDB, OIG, State, OMIG, etc.)

c)      Oversight of delegated function

d)      Plan has ultimate responsibility

26)  Risk area V: Claim Processing

a)      Following standards & setting expectations

b)      Information and records management

c)      Processing and payment

d)      System edits

e)      Coordination of benefits

f)        Cost reports

g)      Mitigating kick-backs: clear contracting policies

27)  Risk area VI: Reporting

a)      Re-enforcement of exiting contractual requirements

b)      Compliance function is responsible for report submission, timeliness, and accuracy

c)      Cost reports and encounter data

d)      Business relations and kick-backs

28)  Risk area VII: Special Investigations Unit

a)      Fraud & Abuse Prevention Program

b)      Staff qualification requirements

c)      Staffing requirements

d)      Periodic reporting to Board

e)      Reporting to law enforcement and State agencies

f)        Formal annual report

29)  Risk area VIII: Marketing & Enrollment

a)      Established policies

b)      Sufficient training

c)      Periodic training updates

d)      Ongoing monitoring

e)      Completeness and accuracy standards

30)  Certification Requirements

a)      Federal regulation provides that as a condition of receiving payment under the Medicaid Managed Care Program, an MMCO must meet applicable certification and program integrity requirements (42 C.F.R. §438.602)

b)      Certification as prerequisite of participation

c)      Annual Certification of Compliance

d)      The certification by the CEO, CFO or delegate attesting, based upon best knowledge, information and belief to the accuracy, completeness and truthfulness of:

i)        Data provided

ii)       Documents provided

31)  Survival of the Compliant

“Trust is not an internal control”

a)      Proactive compliance programs

b)      Board involvement

c)      Risk area identification

d)      Establishment of controls

e)      Ongoing monitoring

f)        Voluntary disclosures/reporting

32)  Doing this right and doing the right thing

a)      Tone at the top

b)      Program structure

c)      Effective education

d)      Controls in place

e)      Transparency

f)        Ongoing monitoring

g)      Periodic assessments of program effectiveness

Carla Engle, MBA

Compliance Solutions Consultant

MediRegs – CCH – Aspen Publishers

Wolters Kluwer Law & Business

888-331-3730 (Phone & Fax)


Share This Article